Collapse of the U.S. Dollar Inevitable

Ever since we were born, the good ol' American greenback has been the currency of choice for the world. Commodities such as oil and natural gas are traded based on the American dollar. Countries with unstable currencies oftentimes fall back on the US dollar for trading purposes.

Could it be that we are nearing the end of an American era? It's quite possibly so. Perhaps another currency such as the Euro will become the currency of choice for world trade.

The value of the Euro is already more than that of a dollar, with $1 USD worth a measly .68 Euro. Back in 2002 when I visited France, the Euro and the US Dollar were almost one-for-one.

Such a change would be devastating to an already crumbling US economy. It's widely known that the United States is deep in debt, and other countries are becoming increasingly skeptical of our ability to even make interest payments. This skepticism can potentially lead to the collapse of our currency.

My theories are not pure speculation. A Politico report written by Eamon James on Thursday October 8 details a "sneak attack" on the US dollar.

According to James, a British newspaper recently reported that Arabian oil sheiks are conspiring with the Russians and Chinese to quit using the dollar to set the value of oil trades. Declining oil prices are hitting the oil sheiks bottom line pretty hard.

The article also brings up another article on drudgereport.com with a startling headline: ARAB STATES LAUNCH SECRET MOVES WITH CHINA, RUSSIA, FRANCE TO STOP USING DOLLAR FOR OIL TRADING.

What's particularly troubling about the oil and currency crisis is that China uses more oil incrementally than the United States. This is because China is less energy efficient and energy conscious.

Should we be concerned with James's report or the report issued on drudgereport.com? Is this just yet another example of media speculation, or does this point to more?

I think the US dollar is in a significant amount of trouble. Look around - the American economy is sloughing off jobs by the hundreds of thousands each and every month. The unemployed can't spend, and are more cautious with their money. Our economy will contract - and that's not necessarily a good thing.

While our economy is contracting, the Chinese economy is booming. The Chinese have jobs, disposable income, and the means to just go out and buy things. What the Americans had a decade ago, now belongs to the Chinese.

What can we do to prepare for these events? Those with a considerable amount of wealth should diversify their portfolio with gold. Gold may decline in value, but it will never lose its value. If the US dollar declines - and it will - gold will skyrocket. Those interested should speak with their individual qualified personal financial expert or stockbroker for individualized recommendations.

Although there is little we can do, the best we can do is set our families up to be in the best situation possible. The dollar could plummet in value, and it's important to plan for the worse.

Sources

Yahoo! News: "Whodunit? Sneak attack on U.S. dollar" http://news.yahoo.com/s/politico/20091008/pl_politico/28091

DrudgeReport.com: ARAB STATES LAUNCH SECRET MOVES WITH CHINA, RUSSIA, FRANCE TO STOP USING DOLLAR FOR OIL TRADING: http://www.independent.co.uk/news/business/news/the-demise-of-the-dollar-1798175.html